Ramsay’s three hospitals in Indonesia will be combined with
Sime Darby’s Malaysian assets, the Sydney-based company said in
a statement to the Australian stock exchange yesterday. Under
the deal, expected to be completed by July 1 subject to
regulatory approval, Ramsay will buy 50 percent ownership in
Ramsay Sime Darby Health Care through its Indonesian assets and
cash totaling about A$120 million ($126 million).

Chief Executive Officer Chris Rex said the joint venture
will provide a platform for expansion and further acquisitions
in Asia after Ramsay posted its slowest pace of revenue
expansion in six semi-annual periods. Sime Darby’s Chief
Executive Officer Mohd Bakke Salleh said the combination will
help the company strengthen its health-care business and enter
new markets.

“We have been cognizant for some time of the attractive
market dynamics in Asia with a burgeoning middle class and an
aging population,” Rex said in yesterday’s statement. “This
deal with Sime Darby presents a significant opportunity for
Ramsay to expand its quality portfolio of hospitals in Asia and
apply its proven health-care management expertise, with a
company that has extensive experience in the Asian
marketplace.”

Ramsay gained 1.9 percent to A$31.50 in Sydney yesterday,
before the announcement. The stock has advanced 15 percent this
year, after climbing 41 percent in 2012.

Ramsay was advised by Citigroup Inc. on the transaction,
according to the statement.

Diversified Group

Sime Darby, based in Kuala Lumpur, operates in more than 20
nations in industries including property, energy and
plantations. The company’s net income fell 36 percent in the
three months ended Dec. 31, the third consecutive quarter of
profit decline, as prices of palm oil slid last year. Its
health-care division accounted for 0.7 percent of revenue in the
fiscal year ended June, according to data compiled by Bloomberg.

Ramsay is poised to sign a deal worth about $500 million
with Sime Darby to expand in Southeast Asia, including forming a
joint venture in Indonesia, the Australian Financial Review
reported, without saying where it got the information.
Yesterday’s statement didn’t provide a total figure for the
deal.

Indonesian Opportunity

Investors are being lured to Indonesia by opportunities
created by the government’s drive to ensure universal health
care in the world’s fourth-most populous country by 2014, Oxford
Business Group said in a report in November.

“The country is rapidly becoming one of the world’s most
important health-care markets, and international and domestic
firms are increasingly benefiting as the market grows and opens
up,” the report said.

The government will need to increase the number of hospital
beds by 30 percent to about 150,000 beds by 2014, Oxford
Business said, citing Mensa Group. Indonesia has six hospital
beds per 10,000 people, compared with 18 in Malaysia and 21 in
Thailand, according to the World Health Organization.